Roadchef (Employee Benefits Trustees) Ltd v Hill & Ors

Where a trust defines beneficiaries as the company’s employees “from time to time”, the natural meaning is ordinarily employees at the time relevant to the trustees’ exercise of their powers. Former employees are excluded unless the trust instrument or admissible contextual evidence indicates otherwise.

The purpose of an employee share ownership scheme may confirm that construction. A scheme intended to incentivise the company’s current workforce through productivity and loyalty does not ordinarily support distributions to former employees. The unusual source or later character of trust assets does not alter the meaning of the beneficiary clause.

The claimant trustee sought a declaration concerning the persons entitled to benefit from the assets of an employee benefits trust. The assets arose from recoveries due to the trust following earlier proceedings concerning the transfer of shares and associated profit.

The trust deed defined “Beneficiaries” as the employees from time to time of the company and participating subsidiaries. The trustees contended that this included everyone who had ever been employed, together with the estates of deceased former employees. The issue was whether the definition referred only to employees at the time of each relevant distribution.

1. Declaration refused. The court declined to declare that former employees and their estates were beneficiaries.
2. The natural meaning of “employees from time to time” was employees at the moment relevant to the particular exercise of the trustees’ discretionary powers. The deed contained no contrary indication, and the available contextual material did not justify extending the class to all former employees.
3. The purpose of the employee share ownership scheme supported that construction. Such schemes were intended generally to incentivise the company’s workforce through continuing productivity and loyalty. Payments or transfers to former employees would fall outside that purpose.
4. The unusual origin of the present asset did not assist construction. It was improbable that the settlors, or a reasonable person reading the deed, had contemplated the improper removal of shares and the resulting recovery. Construction was therefore governed by the deed’s meaning in the reasonably contemplated operation of the scheme, not by the trustees’ preferred destination for this unusual asset.
5. Practical difficulties concerning employee departures before payment were insufficient to affect the construction. A current list could be brought up to date, and payment could be made conditional on continued employment at the date of payment.

The judgment refers to earlier Main Proceedings in which Proudman J had held that the claimants were entitled to recover substantial sums. No citation for that judgment is stated. This decision concerned only the construction of the beneficiary class.